Where to Keep Your Emergency Fund

Saturday

May 4, 2013 at 12:01 AMMay 4, 2013 at 4:23 AM

Dave Ramsey weighs in on high-yield savings accounts

Dear Dave,
How do you feel about using a high-yield savings account as a place to keep your emergency fund?
—Matthew via Twitter
Dave Says: I don’t have a problem with the idea at all, as long as the account is fully liquid. By this, I mean that you can easily get the money out when you need to without a penalty for early withdrawal. To me, having an account with no penalties attached is huge. I’ve seen people open accounts without this feature, and the next week the transmission goes out in the car. Then, instead of just biting the bullet, they’d borrow money to fix the car to avoid paying the penalty. That’s a bad plan.
Besides, you shouldn’t be penalized for using your own money—especially in an emergency. That’s pretty dumb!
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